I can see somebody being over-qualified for the job they're doing. Or over-educated for the lifestyle/world they're in. If somebody is living in an environment where nobody else shares that level of education it could conceivably be a divisive or isolating thing.
Usually though, I think people use that term when they mean something else. Like NoBoxes said: a misnomer for under-experienced. What's being commented on isn't so much the high level of education, but the low level of competancy in other areas of life (like social interaction, or practical living skills).
I don't believe it is truly possible to be over-educated. Unless one adds to that sentence 'for x'.
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